Abignano, Gennaro & Anor v Wenkart, Thomas Richard [1998] FCA 1468

Dr Wenkart then applied for a stay of execution to Hunter J who had been the trial Judge in the Supreme Court action. In the course of refusing that application, his Honour said: It is said that in the absence of the provision of the undertaking by Pitman, prior to the making of the order, that the order in paragraph 11 for Wenkart to pay Pitman the subject sum was of no effect. I do not agree. In the light of the application I have no doubt that I would be more comfortable with having laid to rest at first instance the rights and obligations of the parties by taking formal undertakings at the time. However, I think the manner in which the matter was approached by me and by the parties at the time envisaged the provision of formal undertakings either then or at an appropriate time before or on payment of the subject judgment sum. I reject that part of the application so far as it is based upon the proposition that the order in paragraph 11 is, for some reason, defective by reason of the absence prior to today of an undertaking in terms of paragraph 11, by Mr Pitman. I think it follows from that finding that there is no occasion to interfere with any of the actions taken by or on behalf or through Pitman to enforce the order for payment as set out in paragraph 11 of the judgment. ... In my view questions of retrospectivity do not arise. I treat the order made in paragraph 11 as operative and capable of enforcement from the time the order was made and, further, that steps could be taken under that order, short of payment being made by Wenkart of the judgment sum, without the proffering of the undertaking to the Court before or upon payment of that judgment sum. The narrow question which the learned primary Judge had to resolve was whether the orders in the Supreme Court, when pronounced, created a debt immediately due and payable by Dr Wenkart to Mr Pitman or whether the effect of those orders was that the debt only became immediately due and payable after Mr Pitman had given the undertaking specified in paragraph 11 of the order. The learned primary Judge took the latter view saying at page 8 of her reasons: It is not seriously in dispute that no actual undertaking was given by Mr Pitman to the Supreme Court earlier than 13 February 1998, although his willingness to give such an undertaking had apparently been made plain on 29 September 1997. I understand Hunter J, by his reasons for decision of 13 February 1997, to have indicated that he regarded paragraph 11 of the Judgment as operative from 29 September 1997, subject to the condition that payment of the sum referred to in such paragraph could not be required from Dr Wenkart unless Mr Pitman had earlier proffered his undertaking to the Supreme Court or so proffered it at the time of such payment. I acknowledge that such understanding does not fit comfortably with his Honour's conclusion to that there was "no occasion to interfere with any of the actions taken by or through Pitman to enforce the order for payment as set out in paragraph 11 of the judgment." However, I am not able to understand the passages set out above from his Honour's reasons for decision of 13 February 1998 in any other way. The appellants seek by the present appeal, which was instituted on 23 March 1998, to demonstrate that the interpretation of the order of the Supreme Court to which we have just referred was wrong and that the bankruptcy notice should not have been set aside. However, on 5 March 1998, the same day on which Branson J gave judgment in this Court, the appellants procured the issue of a fresh bankruptcy notice based on the same judgment debt which had unarguably become immediately payable as a result of Mr Pitman's having given the undertaking on 13 February 1998. Proceedings were then instituted to set aside that fresh bankruptcy notice and those proceedings were heard by Hill J on 20 August 1998 and his Honour gave judgment on 28 August 1998 when he made these orders: 1. The application to set aside Bankruptcy Notice number NN 436/1998 be dismissed. 2. The time for compliance with the Bankruptcy Notice be extended until 30 days from the delivery of the judgment of the New South Wales Court of Appeal in appeal numbers 40673 of 1997 and 40718 of 1997. 3. There be no order as to costs. Upon being apprised of the issue of the fresh bankruptcy notice and the subsequent proceedings before Hill J, this Court invited and received submissions from counsel as to whether it should continue to entertain the appeal against the order of Branson J setting aside the earlier bankruptcy notice. Having heard that argument and having had a limited opportunity to reflect on the matter, the Court has come to the clear view that it should not continue to entertain this appeal because to do so would leave open the possibility of orders being made which cut across those made by Hill J to which we have just referred. We also consider that, where the same creditor issues two bankruptcy notices, one after the other, the creditor is required to make an election as to which bankruptcy notice it is with which the debtor is required to comply. The possibility of successive bankruptcy notices has been adverted to in several authorities including a judgment of the Court of Appeal in the United Kingdom in Re Fredericke and Whitworth Ex parte Hibbard [1927] 1 Ch 253. In that case, Sargant LJ, in agreeing with the judgment of Lord Hanworth MR, said at page 261: If, while an earlier bankruptcy notice were still available for a petition, a second notice were given in bad faith or to embarrass the debtor, the Court could prevent oppression by declining to act. But in my view there has been nothing of this sort here. The first bankruptcy notice had been withdrawn, objections had been taken to the second notice which had not been conclusively satisfied, and I think that the third notice was served to escape from those objections, and to place the petitioning creditors in a stronger and less challengeable position than they had previously occupied. The failure to comply with this third notice was attributable not to the existence of the second notice, but to the entire inability of the debtors to pay the remainder of the their debt. The petitioning creditors have complied with the statutory formalities necessary to establish the insolvency of the debtors; and I see no sufficient reason for refusing the statutory consequences of the insolvency so established. In our view, his Lordship in that passage recognised that it is open to a creditor to issue a fresh bankruptcy notice for the purpose of circumventing or overcoming a challenge or a possible challenge to an earlier notice. We consider that to have happened here. The deficiency in the earlier notice was exposed by the reasons of Branson J which, incidentally, were adopted by Hill J when he came to consider the subsequent bankruptcy notice and steps were taken to overcome that difficulty as they could be since the undertaking had been given between the time of the issue of the first bankruptcy notice and the publication of her Honour's reasons. In those circumstances, the course taken by the creditors as assignees of Mr Pitman was entirely open to them but it was a course which could not be pursued in parallel with the prosecution of the present appeal. We consider that the prosecution of the present appeal in the events that have happened is tantamount to an abuse of process and, accordingly, we decline to entertain it. The orders of the Court will be that the appeal be dismissed with costs. I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Court.

Associate: Dated: 13 November 1998 Counsel for the Appellants: Mr A Ogborne

Counsel for the Respondent: Mr D J Hammerschlag and Mr M Green

Solicitors for the Respondent: Solomon Garland Partners